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Quest Means Business
Brazil Government Questions Continue; Turkey's President Erdogan Says Europe Failing to Tackle Terrorism; EgyptAir Hijacker Charged in Court and Confesses; Assad Has Accused Turkey, U.K., France and Saudi Arabia of Directly Supporting Terror Groups in His Country and Iraq; Microsoft Starts Shipping Hololens; China Keeps an Eye on North Korea Over Sanctions; Livestreaming App Faces New Competition; Social Livestreaming Takes Off; DOW and S&P 500 now at their highest level for the year.
Aired March 30, 2016 - 16:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[16:00:00]
RICHARD QUEST: The markets coming to a close, the American Society for the Prevention of Cruelty to Animals ringing the closing bell. Lord knows what
the dog makes of it all. But come on; yes, a robust gavel, from the ASPCA celebrating 150 years as we bring trading to a close on Wednesday it's
March the 30th.
(BEGIN VIDEO CLIP)
QUEST: Tonight, Brazil's President fights back against her rivals denouncing a so-called coo. Thousands of jobs on the line as the industry
lurches into crisis. And the future is right before our eyes. Microsoft shows off its new HoloLens.
(END VIDEO CLIP)
QUEST: I'm Richard Quest, we've got an hour together and I mean business.
Good evening, tonight, Brazil's President says efforts to impeach her amount to a coup as Dilma Roussef fights for her political life there are
new warnings for the Brazilian economy.
(BEGIN VIDEO CLIP)
QUEST: And at this hour, Brazil's Supreme Court is deciding whether or not to approve the appointment of this man, President Lula da Silva, the former
President to serve as her Chief of Staff. Protests are likely regardless of the outcome. It's all the latest development in this crisis that
frankly is almost a tipping point.
DILMA ROUSSEFF, BRAZILIAN PRESIDENT: (As translated) Impeachment without proof of a crime of responsibility is what? It is a coup. The is the issue,
there is no point pretending that we are discussing a hypothetical impeachment. We are discussing a very concrete impeachment without the
crime of responsibility.
(END VIDEO CLIP)
QUEST: The very real responsibility and possibility of impeachment which has been on the burner for so many months and now seems to be coming to the
boil.
Protests and instability come at a time of serious strain for Brazil. Let's put all of this together. You have political instability. The impeachment
committee, let's look and see exactly what the process of impeachment actually is.
(BEGIN VIDEO CLIP)
QUEST: Once the process begins you have the impeachment committee, which then goes to the lower house of the Brazilian congress. And then a third of
the votes are needed for it to proceed, two thirds of the vote and that could happen at this stage as early as mid-April.
Once it's finished in the lower house it goes to the senate. And there you only need a simple majority. That could happen as soon as May. If all of
this takes place then you get to a trial. And the President is suspended for 180 days during the trial. So you've got the committee, the house, the
senate, the trial. But if that goes ahead then impeachment is under way.
As to the economy itself, well, you see why this is quite so significant. Take a look at these factors, the federacy budget deficit is twice as big
as expected. The tax revenue was down, benefit payments are up. The country is in the worst recession for a quarter of a century and the fiscal deficit
as you can see is some $6.3 billion.
Into this maelstrom add in the biggest event in the sporting calendar anywhere in the world and it's the Olympics. And the turmoil is likely to
happen if there would be an impeachment in the middle of the Olympics. Think about those dates I was talking about, April, May, June, July. It
could well go on towards August and then you're well and truly into the Olympics.
However, the International Olympics Committee says "Brazil will offer excellent Olympic games from which the whole country can be proud."
Now, the U.N. struck a more ominous tone when it comes to Brazil.
BAN KI-MOON, U.N. SECRETARY GENERAL: (Inaudible) I'm asking - Brazilian, the political leaders -- for a solution in this. I know it's a challenge
but I think they can address it.
(END VIDEO CLIP)
CNN's Shasta Darlington is in Rio for us tonight. We've talked so many times, Shasta, about the possibility of impeachment. Now are we talking
about the probability of it?
SHASTA DARLINGTON, CNN INTERNATIONAL CORRESPONDENT: Absolutely, Richard, you know, as you know the -- Brazil's biggest party the PMDB pulled out of
the governing coalition, it took them a whole three minutes to decide to do so after standing by the government for 13 years, and that means it's
looking very likely that the lower house of congress will muster those two thirds votes needed.
(BEGIN VIDEO CLIP)
[16:05:10]
DARLINGTON: But part of why this is getting so politicized, and I think we need to raise this quickly Richard is what this impeachment is about.
You know left and right politicians are being implicated in a massive bribery and corruption scandal. But this impeachment isn't about that. The
President herself hasn't been implicated, so what they're trying to impeach her on in some ways is kind of a technicality. What they're talking about
are allegedly breaking budgetary laws. They're saying that she tried to make the budget deficit look better.
QUEST: But, but, but -
DARLINGTON: Go ahead Richard.
(END VIDEO CLIP)
QUEST: -- the technicality of the budget deficit impeachment is really just that. It's a fig leaf, isn't it, for a view? Because obviously her
predecessor was around at the time of the corruption scandal that this government and its predecessors were simply bad, is the argument.
DARLINGTON: Well, the argument is on the one hand her supporters say first of all, you have to prove that she broke any budgetary laws, but even if
she did with all of this bad stuff going on is this really -- is this really justification for an impeachment? And yet they still have to go down
that path of proving that she even broke a law. So this is the big issue here.
On the other hand, her opponents say listen she is incredibly unpopular. This government is not functioning. This country will not be governable
until she is out of the way. The worker's party is out of the way and we can begin to turn around this recession. So maybe these aren't the best
grounds for the impeachment but it's good for the country Richard, and that's their real argument.
QUEST: And in a word, the deadline I was just talking about, April, May, is that sort of the time schedule you're looking at?
DARLINGTON: That's right, just as you said to really -- if again it's approved by the lower house and then the senate that trial would begin and
that could last a full six months. But what it also means is we don't really know for sure who's going to be President when the Olympic games
kick off.
Dilma Roussef herself has said that she is not going to resign, she is not going to give up. So we could really see this battle being extended through
the games if she is temporarily replaced by the vice president in order to defend herself in these impeachment proceedings. Richard.
QUEST: Shasta is in Rio and Shasta you have your work cut out for you in your duties in the weeks and months ahead.
Now many traders believe the economy can't recover until Dilma Rousseff is gone and if you look at the stock markets and how they've surged as the
impeachment has become ever more likely.
(BEGIN VIDEO CLIP)
The (inaudible) rose as much as 2% more on Wednesday then fell back (inaudible).
Joining me now, Alberto Ramos, Senior Latin America Economist at Goldman Sachs. And I'll make it quite clear before we begin our discussion we are
not here to talk about the politics of the issues facing Dilma Roussef, rather the economics of Brazil. This issue that the country is facing the
worst recession in a quarter of a century, how bad and how deep is it?
ALBERTO RAMOS, SENIOR LATIN AMERICA ECONOMIST, GOLDMAN SACHS: It's pretty bad, it's pretty deep, we're facing one of the longest economic recessions
in modern Brazil and economic history. This is leading to a very significant and rapid deterioration of the labor market. The unemployment
rate is projected to reach double digits just in a couple of months. In the meantime despite the brutal recession we're dealing with very
significant inflationary pressures. The inflationary pressures remain quite generalized throughout the economy. We have a very large budget
deficit, the budget deficit is running at an amazing 10.8% of GDP, we have a very rapid deterioration or the public debt dynamics. Public debt is
about to reach 70% of GDP in a few months and is also projected to reach 80% of GDP in a couple of years. So a very, very complex, very difficult,
very challenging economic picture in front of us.
QUEST: Right, but of that picture, I mean there are many countries, Chile, Peru that all are facing the commodity led crisis as a result of oil prices
and the falling commodity prices. How much of Brazil and Russia and China and whatever else you want to throw in the pot, how much of Brazil's issues
are related to that and how much are home-grown mismanagement of the economy do you think it?
RAMOS: I think it's mostly self-inflicted pain is part of the policy idiosyncrasies over the last few years as a lot less to do with an
unfavorable external environment I think. You know more open economies like Chile, Peru, and some others that you mentioned can claim there is an
adverse external environment that led to a very significant deterioration of the market performance. Unfortunately what we are seeing is a
reflection of a certain way of conducting economic policy that left behind very, very large imbalances that need to be sorted out.
[16:10:05]
QUEST: Now, are -- is the market - is the investor community and again, this is not a political point more than an economic point. Is the investor
community looking to an Argentina Macri type situation where they would hope whatever follows on is more orthodox?
RAMOS: Certainly, we're looking for leadership, we're looking for a set of more orthodox, more conventional micro policies that address (inaudible)
some of these imbalances, the very large fiscal deficit, the very significant inflationary pressures and economy that continues to contract.
We need to stabilize sentiment, we need to stabilize the economy so that we would see the end of this recession.
QUEST: Good to see you, Sir, we'll talk. I have no doubt that as this plays out one way or the other politically you and I will be talking
economic policies in Brazil, thank you very much for joining us, we appreciate it.
RAMOS: Thank you.
QUEST: In the United States, investors should be thanking, could be thanking, probably are thinking Janet Yellen for strong gains.
(BEGIN VIDEO CLIP)
QUEST: The Dow and the big board are now at the highest levels of the year. And remember what we saw yesterday where we had had half the day in the
red, half the day in the green. Well toward, it's straightforward into the green at the get go. Good afternoon rally, a bit of a tail off towards the
end, but a gain of 83 points, the highest point that we are seeing in 2016.
(END VIDEO CLIP)
QUEST: Cristina Alesci is here to understand it. Can we put this all down to Janet Yellen?
CRISTINA ALESCI, CNN MONEY CORRESPONDENT: I think we can, actually, to a certain extent. It's quite a dramatic turnaround from February when we were
down 10% and yes, for the most part it is Yellen. But let's not forget that oil has rebounded from mid-February. I mean we didn't have a great day
today but oil has rebounded. And investor fears over a global economic growth including China have seemed to be settling just a little bit.
QUEST: Nothing's really changed. I mean -- I mean, you know, you talk about China. Well, so far nothing has really changed. Oil has gone up which
perversely should be bad -
ALESCI: Exactly.
QUEST: -- for the entire situation. But in this topsy turvy world oil goes up and the market seems to like it. I can't explain it.
ALESCI: You're right - you're right. And investors are confronted with a few confusing signals. You remember just last week a few Fed governors came
out and said we could see a rate increase in April, and then Yellen effectively takes that off the table yesterday.
QUEST: That was extraordinary what she said yesterday, it's only with hindsight overnight that I realize that she basically was saying you know
forget it, guys. Those governors, don't even think about it. I'm in charge.
ALESCI: I'm the boss, exactly.
QUEST: I'm the boss.
ALESCI: That was a pretty clear signal there. But also in her comments she is saying look, the United States seems to be buffered a little bit, or the
fallout from slower economic growth globally will be somewhat mitigated because the United States has all of these things going for it. But at the
same time we started out the year thinking that we were going to get four increases in interest rates. And here we are today talking about two for
the year. And there are some investors who think that we're only going to just see this one. So it's going to be a wild ride for investors throughout
the year although historically April has been a good year for stocks. We're starting to see it already. Thanks a lot.
QUEST: As always, thank you.
Donald Trump has sparked extraordinary controversy after saying that women should be punished in some way for having abortions if the practice were
illegal. A short time ago on the American news network MSNBC, the Republican frontrunner was asked about his views on abortion specifically
if women who have had the procedure should be punished.
(BEGIN VIDEO CLIP)
CHRIS MATTHEWS, MSNBC HOST: Should a woman be punished for having an abortion?
DONALD TRUMP, U.S. REPUBLICAN PRESIDENTIAL CANDIDATE: Look.
MATTHEWS: And this is not something you can dodge.
TRUMP: No, no -
MATTHEWS: If you say that abortion is a crime or abortion is murder, you have to deal with it under the law. Should abortion be punished?
TRUMP: Well, people in certain parts of the Republican Party and conservative Republicans would say yes they should be punished.
MATTHEWS: How about you?
TRUMP: I would say that it's a very serious problem, and it's a problem that we have to decide on. It's very --
MATTHEWS: You're for banning it?
TRUMP: I mean are you going to say - well wait, are you going to say put them in jail? Is that what the punishment you're talking about?
MATTHEWS: Well, no, I'm asking you because you say you want to ban it. What does that mean?
TRUMP: I would - I am against - I am pro-life yes.
MATTHEWS: What does ban - how do you ban abortion? How do you actually do it?
TRUMP: Well you know you'll go back to a position like they had where people will perhaps go to illegal places.
MATTHEWS: Yes.
TRUMP: But you have to ban it.
MATTHEWS: If you ban it and they go to somebody who flunked out of medical school.
TRUMP: Are you catholic?
MATTHEWS: Yes I think -
TRUMP: -- and how do you feel about the catholic churches position?
MATTHEWS: Well I accept the teaching authority of my church on moral issues.
TRUMP: But do you know their position on abortion?
MATTHEWS: Yes I do.
TRUMP: And do you concur with that position?
MATTHEWS: I concur with their moral position but legally - and I get to the question - here's my problem with it -
TRUMP: No, no, but let me ask you. But what do you say about -
MATTHEWS: It's not funny.
TRUMP: -- your church, yes, it's really not a funny thing. What do you say about your church they're very, very -
[16:15:02]
MATTHEWS: They're allowed to - but the churches make their moral decisions but you're running for President of the United States will be chief
executor of the United States, do you believe in punishment -
TRUMP: No, but, but -
MATTHEWS: Do you believe in punishment for abortion, yes or no? as a principle?
TRUMP: The answer is that there has to be some form of punishment.
MATTHEWS: For the woman?
TRUMP: Yes. There has to be some form.
MATTHEWS: Ten years?
(CROSS-TALK)
TRUMP: I don't know, that I don't know, that I don't know.
MATTHEWS: Why not?
TRUMP: I don't know because it's not -
MATTHEWS: You take positions on everything else.
TRUMP: I frankly I do take positions on everything else it's a very complicated position.
(END VIDEO CLIP)
QUEST: CNN's M.J. Lee joins me now. Factor in for me, please, what we've just heard and how it plays out.
M.J. LEE, CNN CORRESPONDENT: Yes, we've been shocked by Donald Trump many times throughout the cycle. But I think this is an answer that has left
many people frankly just speechless not sure of how to even respond.
(BEGIN VIDEO CLIP)
LEE: The fact that he is saying one, that abortion should be illegal and that if that were to become the case women should be punished and then not
actually saying what sort of punishment he is talking about I think is very confusing.
(END VIDEO CLIP)
QUEST: Right. But of course technically, he is right in that - and bail me out before everybody jumps on this. Technically he is right, in that if he
was able to ban abortion there would have to be some sort of sanction for those who have it, I mean just by virtue of the law.
LEE: Yes, but keep for mind that there are many, many people out there who already believe that Donald Trump is terrible when it comes to women's
issues. So I think to hear him say the words yes, there should be some sort of punishment is frankly shocking for a lot of people to hear.
QUEST: Ok, those again, just the politics of it, those women who were pro- choice, pro-abortion, they weren't going to vote for him anyway. Those women who are pro-life may well still vote for him.
LEE: And I think the point here is that, I mean remember, he has won lots of primary contests even after having made comments about Carly Fiorina,
Megyn Kelly, that were considered inflammatory by many. However this is the general election that we're talking about that may be problematic. You
look at the polls and he, you know when you're polling the country ahead of the general election, about half of Republican female primary voters say
that they could not consider voting for Trump ever.
QUEST: Hillary Clinton has tweeted "just when you thought it could not get worse, horrific and telling." And Bernie Sanders, says "your Republican
frontrunner, ladies and gentlemen, shameful."
LEE: Right, and this is very tricky for the Republican party. Remember, this is a party that wants to become more inclusive, not just with
Hispanics, African Americans, minority groups, but women, as well.
QUEST: Right, I'm just going to push you on this if I may. If Ted Cruz who is strongly pro-life, was asked the same question, should there be
punishment by dint of his views he surely would have to answer the same answer.
LEE: I don't know if that's correct.
QUEST: Then you need to find out.
LEE: Yes, I don't know if Ted Cruz asked the same question should there were punishment for women who get abortions, I do not believe that - yes,
even in that case I do not believe that Cruz would say yes, women should be punished.
QUEST: We'll talk more about it, we'll hear much more about it. Thank you. This is - this arguably is a game-changer in the Donald Trump -
LEE: We'll see.
QUEST: -- Primary, but he has survived many of these sort of issues before. Thank you.
Plummeting steel prices look to have claimed another victim as Tata Steel plans to put its U.K. operations up for sale.
(BEGIN VIDEO CLIP)
QUEST: We'll discuss that back to our business agenda after the break.
(END VIDEO CLIP)
(COMMERCIAL BREAK)
[16:20:30]
QUEST: 15,000 jobs and the fate of the British steel industry are in serious jeopardy tonight following the announcement by India's Tata Steel
that it's exploring the sale of its entire business in Britain. The firm is blaming falling prices and increased competition from China and says it
makes it impossible to turn a profit.
CNN money's Europe editor, Nina dos Santos has the details of the story.
(BEGIN VIDEO CLIP)
NINA DOS SANTOS, CNN MONEYS EUROPE EDITOR: The steel price is just half of what they were some 18 months ago. The sector had been struggling to stay
profitable for some time. But few expected such a drastic move as Tata announcing the closure of its entire U.K. business.
KATIE JAUNCEY, ENGINEER: Well I don't know whether I was very naive but as far as I was concerned it was a meeting to discuss saving money in a number
of areas particularly employment costs. But what actually appears to have happened is we're now in a position where the whole of the U.K. business is
up for sale.
SANTOS: Tata expanded heavily into the U.K. in 2007 with its acquisition of the Anglo Dutch giant, Corus. But despite pouring some $4 billion into
its European operations it's 14 plants across Great Britain lost two thirds of that value over just the last five years. The move to sell them leaves
15,000 jobs on the line.
As Britain's biggest steel mill, Port Talbot in Wales will be the worst affected as highlighted in this video by the Steelworkers Union community.
UNIDENTIFIED MALE: It's given us jobs.
UNIDENTIFIED MALE: It's given us homes.
UNIDENTIFIED FEMALE: It's built our lives and our communities.
SANTOS: With daily losses of over $1.5 million finding a buyer will be difficult. And although Tata has managed to off load some assets,
government intervention may be the only option as long as the furnaces stay on.
TERRY SCUCLER, CEO EFF: Let us hope that Tata Steel will continue to invest on an interim basis on these plants, let us hope that they will work with
government and we will find a sustainable, viable purchaser to keep these plants going for the future.
SANTOS: Over-supply, high manufacturing costs and the abundance of cheap steel from China has led to a crisis for the industry. Although prices have
recovered somewhat recently, Tata's move to abandon this once vital market will shake U.K. manufacturing right to its very core.
Nina dos Santos, CNN Money, London.
(END VIDEO CLIP)
QUEST: As Nina reported, the plant in Port Talbot is Britain's biggest steelworks and it has the most to lose in a potential sale. But it's the
factors that go well beyond the little welsh town. So connect the dots and you see the issues facing it.
(BEGIN VIDEO CLIP)
QUEST: Tata itself of course is based in Mumbai and that's where the steel review took place, where they held the meeting looking at the entire
European steel operations. But global demand, especially in Europe remains muted since the financial crisis. There are some still big requirements for
Port Talbot, for example, British Railways but they are limited.
Now adding to that extraordinary growth in Chinese steel you've got cheap Chinese steel with production up almost 800% in the last 20 years. And much
of that steel has been sent to Europe and dumped within the European Union. Beijing has been accused of dumping cheap steel for years.
In January, the E.U. did impose tariffs on Chinese steel but it was seen as too little and too late. So what do you do about this situation?
(END VIDEO CLIP)
QUEST: Now, the British government has already said that it is not looking to nationalize the British steel industry or those plants that may be
closed. But they are committed they said to finding a solution.
Harish Patel is the national officer from Steel for the U.K. union Unite. He told me the members are calling for some form of re-nationalization.
(BEGIN VIDEO CLIP)
HARISH PATEL, NATIONAL STEEL OFFICER, UNITE: I think it came as a shock, because initially what we thought that the plan we had worked out with
local management was a positive one and all it needed was breathing space and support from the government to ensure that we had a level playing field
and it was quite successful as far as the way we saw it.
QUEST: The word is that the U.K. operations are losing a million dollars or a million pounds a day, by some measures. That is clearly unsustainable for
whatever or whoever solution is put forward.
[16:25:00]
PATEL: In terms of the losses its sustained, quite clearly in terms that part of it is as a result of the unfair energy costs we have got in
Britain. And the other part of it is that lack of investment by Tata Steel in modernizing the facility. And the third point was that the unfair
business rates which the U.K. government charges to investment on plant and machinery which is part of the causation. And coupled with that fact is
the cheap imports which are being allowed into the U.K.
And if you look at the United States in terms of the actions it has taken to protect its steel industry unfortunately the U.K. administration is
blaming Europe, they do not - opposing some of the tariffs which are being proposed by the European Commission. Which is totally what our members are
looking for, is a fair playing field in terms of a competitive nature of the steel industry where we're living in the moment.
QUEST: The business secretary speaking in Sydney, the U.K. business Secretary says that nationalization is not the answer. He says he's
looking for some kind of government support but I don't think that nationalization is going to be the solution. So if it's not
nationalization which seems to be off the table at least as far as the government is concerned, what are you now looking for from the U.K.
government?
PATEL: We're certainly looking for state intervention in one shape or another. Whether your terminology, in terms of the terminology whether its
nationalization or protection, whatever the terminology they want, we want the state to intervene to support the steel industry for the long term
future and for the younger generation. And particularly for manufacturing in the U.K.
So our position is if you say that nationalization is not an acceptable word, then you need to come up with a positive word in terms of how we can
support the steel industry in the U.K. for the long term future.
QUEST: To viewers watching around the world and I preface this question obviously that you're talking to a global audience here they may - they may
well say well it's all very good listening to this but if those U.K. steel workers can't compete there and Tata's making losses then it seems entirely
reasonable that Tata pulls out and that's just a hard lesson of the global economy. What would you say?
PATEL: I would disagree with that view for the simple reason is that we are talking about people's lives, their families and the community and the
devastation it will have on the community in the U.K. So this is a long term damage for a short term gain.
What we are saying is that we need to look at the foundation industry very, very carefully and the government needs to intervene to protect this
treasure which we've got in the U.K. in terms of assets and look at how we support the steel industry in the long term. And more importantly it's
about bringing a level playing field for the U.K. workers so they can compete in the global market.
(END VIDEO CLIP)
QUEST: That's the issue of the unions and the issue of job losses both at British Steel and Tata, and at Boing which we will talk about later in the
program.
That's the subject that I've been writing about in the newsletter, the Quest Means Business newsletter and the issue of how workers at the moment
are seemingly getting the worst side of every deal while companies are making profits they're seeing their jobs go.
Subscribe to the Quest Means Business newsletter, it's got the profitable moment, it's got the top headlines, the end of the New York day, before
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Microsoft's augmented reality headset is on its way to developers.
(BEGIN VIDEO CLIP)
QUEST: We're going to speak to one of the firm's vice presidents for a review of the HoloLens. What is the HoloLens and why is it different? In
a moment.
(END VIDEO CLIP)
(COMMERCIAL BREAK)
[16:31:29] RICHARD QUEST, CNN ANCHOR: Hello, I'm Richard Quest. There's more QUEST MEANS BUSINESS in just a moment.
And I'm going to be talking to Microsoft on the first day of its flagship conference in San Francisco, about what they announced and what's going to
be happening. One person who won't be appearing is the company's artificial intelligence chatbot after some very unsavory tweets.
And for all of that this is CNN. And on this network the news always comes first.
Investigators in Brussels have found photos and plans of Belgian government buildings, including the Prime Minister's office on a computer discovered
outside a terror suspect's apartment. It was found in a rubbish bin outside the building believed to be a bomb factory for the Brussel's terror
cell, explosives and an ISIS flag were found inside the apartment.
Turkey's President says Europe has failed to realize the seriousness of its terrorism problem. Turkey says it warned Belgium and the Netherlands about
one of the Brussels bombers when he was deported. In an exclusive interview with CNN, Tayyip Erdogan said both countries have failed to get a
grip of the situation.
(BEGIN VIDEO CLIP)
RECEP TAYYIP ERDOGAN, PRESIDENT OF TURKEY (through interpreter): Of course both the Netherlands and Belgium for someone having a jihadi intention or
not, first they need to know what jihadi intention means. They have to identify whether these are foreign fighters or jihadists. The Netherlands
nor the Belgians seemed to have understand what jihadists stand for, we have been calling the nations for a common stance against terrorism, and
many of the European member states seem to have failed to attach the significance of this call for action deserves.
(END VIDEO CLIP)
QUEST: The man accused of hijacking an EgyptAir flight to Cairo and forcing it to land in Cyprus has now been formally charged. Seif Eldin
Mustaf appeared in court in Cyprus on Wednesday. He confessed to all the charges. The flight was diverted after he claimed to be wearing an
explosive jacket, which was later proved to be a fake.
Syrian President, Bashar al Assad has accused Turkey, The United Kingdom, France and Serbia of directly supporting terror groups in his country and
Iraq. Mr. al Assad have commonly referred to Syrian opposition groups as terrorists. In an interview with the Russia's state run Sputnik News
agency. He also said his government is showing great flexibility at talks in Geneva on ending the country's five-year conflict.
Donald Trump has said he believes women who have abortions should be punished in some way if the practice were banned in the U.S. Republican
frontrunner for president did not elaborate on what he believed that punishment should be when he was asked during an MSNBC town hall debate.
His Democratic rival Hillary Clinton has called Mr. Trump's comments horrific.
Microsoft's augmented reality headset is one step closer to becoming a real product, called a Hololens. It's still in its early stages, but the tech
firm said it's started shipping a version to approved software developers on Wednesday. Microsoft made the announcement at its annual build
conference which began in San Francisco.
(BEGIN VIDEOTAPE)
[16:35:00] UNIDENTIFIED MALE (voice over): Using transparent lenses, special sound and an understanding of your environment, holograms look and
sound like they're actually part of the world around you. That is mixed reality. With Microsoft Hololens --
(END VIDEO CLIP)
QUEST: Now, the price tag for the developers is about $3,000. The retail edition is expected to be much more affordable. Yusuf Mehdi is Corporate
VP for Windows and Devices at Microsoft. He joins me live from San Francisco. Look, I'm a novice here, sir, I'm ingenue. I don't really
understand all of this stuff. Tell me the difference between virtual reality and augmented reality.
YUSUF MEHDI, CORPORATE VP FOR WINDOWS AND DEVICES, MICROSOFT: Yes, absolutely, Richard. Two things, virtual reality is kind of a simpler
concept. It is basically opaque to you in a private world. Usually seated and your tethered to a computer. And it's suited for entertainment and
gaming a rich thing. The mixed reality, what we're trying to do with Hololens is a much richer idea. It's the notion that you are fully present
in the world and we overlay digital holograms on your real world. It's a fully untethered computer that you wear, and so you can walk about the
entire world with the computer on. Much bigger idea.
QUEST: OK, but what is its uses? But what purpose? I'm guessing looking at the video it's not for me to play games on, although I'm sure you could
play pretty elaborate games, but you must have great and good value that you got in mind.
MEHDI: Yes, absolutely, and today we're working with a couple of concrete partners to use some examples. So we've worked with NASA where they have
actually gone and mapped the surface of Mars and they're using it to plot how they take the Mars rover, and they traverse the terrain, which is very
hard to do. They can map it out with Hololens and see it. In addition they've using the Hololens up in the International Space Station, 250 miles
above the earth. Astronaut Kelly Scott was using it. And at Case Western University, they were using it to teach students medicine. Where they can
bring up the human body, and you can go around and see the human body in its existence.
QUEST: So how far are we from this -- it's obviously a reality in a sense that you're talking about it to me as being people are actually using it.
But what is your biggest challenge now in getting this augmented reality to the next level?
MEHDI: So it is as you said, absolutely real. People are actually using it today in NASA, Case Western, and many companies. I think the next step
for us is what happened today. Today we shipped the first development kit to developers. That's going to spawn a whole set of news applications.
And then what you will see over the course of the year is we'll get it out to more enterprises, and then eventually we'll mainstream the device. So
where we can get the comfort, the price, the fit, all that to be more and more mainstream.
QUEST: And one question on Tay just to finish off. I mean, I have to hand it to Microsoft, I have to hand it to you. You know, you guys put your
hands up. The thing went wrong. It came up with some particularly offensive comments. But you basically are admitting, hey, this is what
happens when you're at the forefront of technology and we are learning about these things, too. So the question on things like Tay's, just how
much of all of this is experimentation? Things will go wrong.
You know, absolutely, and I think you said it, we're at the dawn of a new age at this artificial intelligence bots. And you're going to find a lot
of problems and you are going to make a lot of mistakes, which we made most recently. We had successes in China with it, with Zhuhai's 40 million
people in China are using it. But we learned a bunch of new things that are unique to the U.S., which is just the nature of the internet and the
nature of the social conversation in the U.S. is different and we've learned. And one of the things I think fascinating is that it's no longer
just technical problems, it's actually social societal problems that get merged together as this technology and society come to be closer and closer
linked together.
QUEST: Yes, and you also know there is are some particularly unpleasant people that are determined to make some very unpleasant suggestions. Thank
you, sir.
MEHDI: Yeah, thanks, very much.
QUEST: Microsoft's augmented teenager that we came to life, we were talking about it. Tay it learns from people that it speaks to. And had
this is what it tweeted today before the account was made private. "Kush, I'm smoking kush in front of the police." So we now add drugs to Tay's
list of troubling messages, which not being making light in any shape or form, including denial of the Holocaust, racism, and misogyny.
Shelly Palmer, from Shelly Palmer Digital Living. Shelly, Tay came back to life. And you couldn't' necessarily hear here. Could hear here.
SHELLY PALMER, HOST, SHELLY PALMER DIGITAL LIVING: Yes, I see, OK.
QUEST: He makes a really strong point there that first of all places like Microsoft are going to try and fail. But it's not their fault.
PALMER: By the way, ignore 100 percent of the stumbling out of the gate. Let me tell you what is about to happen and let us be very clear.
[16:40:00] There are four kinds of work that human beings do. There is cognitive work, manual work, repetitive work, and non-repetitive work, and
you can do any combination of those in any given day. If you do cognitive non-repetitive work you think you're safe. You think because what you do
is non-repetitive and you need to interact with your environment, because you're using your brain, you are not going to be replaced by a machine or
something that does repetitive work like an answering machine. AI, the way it's laid out right now, machine learning and artificial intelligence,
conversation as a platform has the potential to put every customer service rep out of a job, every driver out of a job. Everybody who does cognitive
work for a living, out of a job. So let's get serious. This is not evolution, it's a revolutionary new product, and Microsoft is telling you,
it's the beginning. Everyone is laughing at Tay. Tay is an experiment, don't worry they're going to get it right. Think of the Wright brother's
plane and then go 15 years in the future for the Write brothers and tell me how the world looked.
QUEST: Ok, now, so let's talk about this. Because Tay gave did tell a lot about how unpleasant people are.
PALMER: Oh, it told us a lot.
QUEST: But I could have told you that for free, frankly. At Richard Quest, there is never any shortage of people that want to be gratuitously
offensive.
PALMER: Correct. And what's interesting about the platform like this, any conversation as a platform, any machine-learning algorithm that learns from
people, it learns what it's taught. You don't come out of your mother's womb knowing how to hate. You're taught to hate. And they taught this
algorithm how to speak like it spoke. Human beings taught it to do that. It didn't know it by itself.
QUEST: So we're going to learn by hard example and long to tough lessons, but you just painted a picture of AI and learning. But you've painted a
rosy picture in a sense of the benefits.
PALMER: Yes, you want to about out the other side?
QUEST: Well, there is another side.
PALMER: Of course there is. Because anything that can be used for good can be used equally for bad. And so you'll see artificially intelligent
computer viruses, artificially intelligent enemies in war. You're going to see machine learning algorithms as weapons -- of course by the way --
QUEST: And job losses, societal change.
PALMER: By the way, there are people on -- if you would go online I wrote an article at shellypalmer.com that sort of takes this to another level
that talks about should there be a universal basic income for the people who are going to be displaced? I mean we're talking about a change in
society we've never saw it in history of mankind.
QUEST: Really?
PALMER: Because you went from manual labor -- look when we invented the steam engine we amplified our muscles hundreds of thousands of times. We
are able to build skyscrapers like the empire state building. Now the computer revolution, if you will call it the information age, we're
amplifying our brain hundreds of thousands of times. So we can do things with computers we could never do on our own and it will
change the nature of work.
QUEST: This is what Klaus Schwab of WEF calls the fourth industrial revolution.
PALMER: Yes, it is.
QUEST: Do you buy it?
PALMER: I do, I don't know if I buy it exactly as written. Because I don't think we're all smart enough. By the way, if the future comes out
the way we think about, it's going to be a pretty boring future. We're using our path to generate our thoughts of the future. The future is going
to be fascinating and AI is going to play a gigantic part. One of the biggest things that scares me at night, Richard, every night is what is the
evolution of AI and machine learning over time? Because I don't think anyone can predict the unintended consequences of Tay getting it right. By
the way, you'll be able to order a pizza by just talking to talking to your device, that's fine.
QUEST: Shelly, thank you.
PALMER: Always a pleasure.
QUEST: Good to see you Shelly Palmer. I can't help feeling that the entire mass ranks of artificial intelligence was not designed to order a
pizza, but I do know what he means, or maybe not. Maybe ordering a pizza is not such a bad idea. Make it with pepperoni and cheese, please. A
break, I'll see you in a moment.
(COMMERCIAL BREAK)
[16:45:16] QUEST: President Obama is set to meet his Chinese counterpart in Washington on Wednesday when they will discuss growing international
concern over Pyongyang's actions. China's close economic ties with North Korea may be the key in bringing about the country to the negotiating
table. CNN's Matt Liver now reports.
(BEGIN VIDEOTAPE)
MATT RIVERS, CNN CORRESPONDENT (voice over): they drive across the old narrow bring around 9:00 a.m. each day, Chinese trucks carrying goods into
North Korea. They leave from Dandong the border city on the Yalu River It's the economic lifeline of North Korea. China the only country left
willing to do significant trade with North Korea's President Kim Jong-un regime.
New U.N. sanctions levied against North Korea's nuclear program have impacted that relationship. For example, North Korean coal exports,
important revenue for the country are now banned if profits from them might be funneled to sanctioned programs. China must also now inspect shipment
into and out of the country. Criticized in the past for not enforcing sanctions, officials deny that, but say they will strongly implement this
latest round.
We watched as North Korean drove into China around midday, mostly empty. They end up in yards like this. Loaded up with Chinese goods that get sent
back across the border. We asked how officials specifically planned to inspect those making calls to the authorities in Dandong and at the
minister of foreign affairs. Neither would provide details. Security guards we met outside the yard were not keen to talk to us either.
RIVERS (on camera): I trying to see for ourselves how these inspections are done can prove to be difficult as you can see. We try to talk to
ordinary people, truck drivers, even to talk about these inspections but none of them would agree to speak with us and we constantly face harassment
like you see there right now.
RIVERS (voice-over): It's near impossible to determine if the inspections are effective. What is clear though, is the continued struggle of those
inside North Korea. For ordinary people, poverty and hunger remain chronic. The heavily sanctioned Kim Jong-un regime can't or won't provide
supplies to its people. So others do seeing a business opportunity.
We met this man in secret along the border at night. He illegally smuggles goods into North Korea for a living. He tells us he deals in basic living
supplies, focusing on everyday grains and car parts. For him, the sanctions don't mean much, but for other smugglers he works with the added
restrictions are good for business.
UNIDENTIFIED MALE (through interpreter): The North Koreans have to buy lots of goods from us because there are fewer legal shipments through the
border, more from us.
RIVERS (voice-over): He says since the latest sanctions began there has been more requests from North Korea for industrial chemicals and steel. He
has no idea what they're used for but he knows who is buying.
UNIDENTIFIED MALE (through interpreter): Not ordinary people, it's the military and their families. Everything is completely corrupt there.
Ordinary people have no money so all the goods are purchased by wealthy people.
RIVERS (voice-over): He thinks China has stepped up its inspections since the newest sanctions but doubts that any sanctions, enforced or not, will
ultimately do any real harm to Kim Jong-un regime. Matt Rivers, CNN, Dandong, China.
(END VIDEOTAPE)
QUEST: As we continue our nightly conversation on business and economics let's enjoy business on the move.
Now, the football star Pele is suing Samsung for $30 million. He's hoping that a judge will show Samsung the red card and says the company is using
his lookalike as an advertisement for a TV set.
Boeing has announces it will cutting 40,000 jobs to reduce costs. It won't be firing people. It will be offering voluntary buyouts. Boeing is
grappling with softer demand and a fierce competition for an Airbus, which is exactly what that plane is, an A-320.
Uber has refunded a customer who had a wild ride. Now the passenger had had a few too many to drink and fell asleep. The driver took a 20-mile
detour around London, you can see where he should have gone, and that is where he went. Uber has returned the fair of $150. The fair should have
been just $22. That is business on the move.
[16:50:00] As we continue tonight, allow you to pause to think, to think, "MAKE, CREATE. INNOVATE."
(COMMERCIAL BREAK)
QUEST: Twitter's live streaming at Periscope is celebrating their first anniversary this week. Now, when Periscope launched its big rival was
Meerkat. And that company with almost no funding and only a handful of employees. Now Periscope is up against the likes of Facebook and YouTube.
Live streaming your own life. Samuel Burke reports.
(BEGIN VIDEOTAPE)
SAMUEL BURKE, CNN MONEY, BUSINESS CORRESPONDENT: Today, I'm live streaming from my smartphone to people watching on social media. Some things I
always wanted to do here in New York. Starting with the visit on top of the new World Trade Center.
So I'm broadcasting live right now on Twitter's Periscope. You can see Uptown Manhattan there. The Empire State Building and Central Park is just
off there in the distance. Meerkat was the first live streaming app to hit it big, a few weeks later though kicked it off of its platform in favor of
its own app Periscope. And even though there's so much competition, tech experts say there is big chance for big money to be made by the leading
social networks.
BRIAN BLAIR, PRINCIPAL, GRAYS PEAK CAPITAL: The reason for that is because there are many different ways that can monetize this. They can monetize it
with a pre-roll, maybe a short 15 second ad that people will see before a live stream starts.
BURKE (on camera): See if I survive.
BURKE (voice-over): Still attempting to defy gravity.
You think I can, I'll do. I know you can do it.
My next livestreaming event is on Facebook as I go indoor skydiving. Even though I have 100,000 more followers on twitter, my Facebook followers are
watching this live stream way more. I believe I can fly. And they're much more engaged.
BLAIR: People are watching more and more video really every month on Facebook so they're spending more time on a platform. So more likely they
will see you, see you're livestreaming and they're going to want to engage it.
BURKE: YouTube is supposed to be the top dog for internet video. They have a livestreaming platform, but it lags way behind Twitter's or
Facebook's. They only allow you to use Samsung phones. Other companies might be waiting in the wings like Snapshot, but the real breakthrough may
come with celebrity livestreaming.
BLAIR: The number of people who are watching livestream is going to move very quickly into the millions, any time somebody of notoriety or famous
does a livestream. If Kim Kardashian said she would do a livestream on Facebook tomorrow it would have 10 million or 20 million viewers.
BURKE: As my high-flying adventures prove, the sky may be the limit for the winner of the livestreaming awards. Samuel burke, CNN Money, New York.
(END VIDEOTAPE)
QUEST: So any question really becomes at what point is this steaming a little too much? When you've Periscoped your life in real-time, what
happens after that? @richardquest where you can join me to discuss. The whole Twitter thing it all seems rather passe now.
[16:55:00] But I still enjoy reading what you've got to say, we can always have a good discussion when I'm tweeting. A final look at the markets.
Before we have a break. I want to show you particulars, because the DOW and S&P 500 have now at their highest levels of the year. The market
opened strongly and remained strong throughout the course of the day. The reason, of course, is the back of Janet Yellen's comments, which basically
said that there'd be no rush to raise interest rates, and one or two rate before the end of the year is most likely.
And a look at the European markets, and you put it into perspective. Again, the Yellen effect right across the continent with Paris showing the
best gains, or the gains of 1.75 percent. We'll have a Profitable Moment after the break.
(COMMERCIAL BREAK)
QUEST: Tonight's Profitable Moment. Two pieces of news today brought into sharp focus the current situation. First of all, Boeing announcing up to
4,000, possibly 8,000 jobs will go at its factories in Seattle as a result of stiffer competition against Airbus.
And then the steel situation in the U.K., where 15,000 jobs are at risk. In both cases, we have traditional old-style companies facing some very new
and difficult in trading environments. All sorts of reasons for this. Currency exchanges, you've got problems of competitiveness and dumping from
developing nations. You've got whole questions of worker conditions and labor. But at its very core, it's the reality that workers in these
industries are saying, what happened to me? How on earth can companies be making good money, record profits, share buybacks, but I'm losing my job?
It goes to the heart of this issue of inequality, one that needs to be addresses if workers are to feel they're benefiting in the growth. And
that's QUEST MEANS BUSINESS for tonight. I'm Richard Quest in New York. Whatever you're up to in the hours ahead, I hope it's profitable. I'll see
you tomorrow.
END
